Which one of the following is TRUE?
A)Stand-alone ratios provide sufficient information about a firm's performance.
B)Ratios are comparative measures over time and/or across firms.
C)Ratios are forward-looking measures.
D)Analyzing historical ratios is not useful.

Question

Quizplus · Accepted Answer

Ratios are comparative measures over time and/or across firms. They are used to assess a company's financial performance and health, and can be helpful in identifying areas in which a company is doing well and areas that require improvement. However, stand-alone ratios may be misleading and may not provide a full picture of a company's financial health. It is important to analyze ratios in comparison to industry benchmarks or historical trends to draw meaningful conclusions. Ratios are backward-looking measures, reflecting past performance, and are not necessarily indicative of future performance. Analyzing historical ratios is useful as it can provide insights into trends and patterns in a company's financial performance.

Which One of the Following Is TRUE